Maher & ors. -v- Minister for Agriculture, Food & Rural Development & ors, [2001] IESC 32 (2001)

Docket Number:340/00 & 31/01
Party Name:Maher & ors., Minister for Agriculture, Food & Rural Development & ors
Judge:Denham J. / Fennelly J. / Keane C.J.

Keane C.J.

Denham J.

Murphy J.

Murray J.

Fennelly J.









JUDGMENT delivered on the 30th day of March 2001 by Keane C.J.


What has become known as the milk quota system has given rise to much litigation, both at the level of the member States and in the Courts of Justice of the European Communities. The present case arises out of the making by the first named respondent (hereafter "the Minister") of the European Communities (Milk Quota) Regulations 2000 (S.I. No. 94 of 2000) (hereafter "S.I. 2000"). These provided for certain changes in the system which I shall endeavour to summarise at a later point. The validity of S.I. 2000 is challenged by the appellants on the ground that it constitutes the exercise of legislative power by the Minister contrary to Article 15.2.1º of the Constitution, violates the property rights of the applicants guaranteed by the Constitution and is not afforded immunity by the provisions of Article 29.4.7 of the Constitution, providing for the consequences of our accession to the European Economic Communities. The appellants' claim was dismissed in the High Court in a reserved judgment by Carroll J. and they have now appealed from that judgment and order to this court.

The milk quota scheme was first introduced in 1984 by the Council of EEC in order to cope with problems which had arisen from the implementation of the Common Agricultural Policy (hereafter "the CAP") established under the Treaty of Rome as it affected the market in dairy products. The measures establishing the scheme were, accordingly, part of the common organisation of the market in the milk sector in the EEC, deriving from the CAP and known as the COM.

One of the features of the COM was a guaranteed price for milk producers throughout the EEC. This ultimately had it as its consequence a supply of milk and milk products throughout the EEC which was hugely in excess of the demand, resulting in massive costs to the community and severe downward pressure on milk prices. Attempts to deal with the problem in other ways having proved abortive, the scheme adopted in 1984 provided for a ceiling on milk production in each of the member States and the allocation to individual producers of a ceiling on their annual production. This was effected by the imposition of what was described as a "super levy" on any producer who exceeded the ceiling which would render uneconomic the production of any milk in excess of the relevant figure. This was done by the allocation of what were called "reference quantities" to the individual producers which became known as "quotas" and it will be seen that it was an essential part of the scheme that the total of the quotas in any member State, including Ireland, should not exceed the quota allocated by the EEC to the member State in question.

The scheme was originally intended to run for five years up to the 31st March 1989, but was in fact successively extended up to the 31st March 1993. A new, but substantially similar, system was then adopted which expired on 31st March 2000.

While the scheme achieved its objective of halting the growth in milk production in the EEC, the quota was initially set at a level which was substantially above the consumption of milk and milk products in the EEC. Accordingly, there continued to be a surplus of milk in the community. Various methods were adopted by the EEC of dealing with the resultant problems. Eventually, what was called "Agenda 2000" was adopted by the EEC Commission with a view to preparing the dairy sector for the further problems which would arise from the enlargement of the European Union and the liberalisation of trade within the World Trade Organisation. The latter developments would mean, not merely a new threat of surpluses in milk production, but also an undermining of the effectiveness of the quota regime in maintaining milk prices.

Agenda 2000 proposed to continue the milk quota regime for six years to March 2006 and also envisaged other proposals which were of particular relevance to the present proceedings. These related to what was seen by the Commission as a particular problem, i.e. the extent of quotas held by persons who were no longer actively involved in the production of milk. Under the scheme as originally introduced, the milk quota was attached to the land and could only be transferred to another person if the land to which it was attached was being transferred to that person. An exception was introduced, however, in 1987 which enabled producers to lease any part of the quota which he or she did not intend to utilise in a particular year until the end of the milk quota year.

The new measures adopted by the EEC to give effect to Agenda 2000 required the member States to adopt detailed rules as to what was to happen in relation to the transfer of quotas. It also conferred certain discretions on the member States as to provisions which might or might not be included in any such detailed rules. The relevant rules in Ireland are contained in S.I. 2000 which is challenged in these proceedings.

The effect of S.I. 2000 is that, subject to certain exceptions, it is no longer possible for persons who are not actively engaged in milk production to transfer their quota with the land by way of sale. Nor, again, subject to certain exceptions, is it possible to lease a quota with the land. While a quota can be transferred upon the renewal of a lease of lands, a person who has not been involved in milk production for three years or more, can make a temporary lease or transfer of the quota for one further year and no more. The regulations also provided for a "restructuring scheme" under which a quota holder can offer all or part of his or her quota to the purchaser of the milk in return for payment. The maximum price is to be determined by the Minister. There are exceptions to these various requirements when the lands were being sold, leased, given to or inherited by a spouse or family member.

The first applicant in an affidavit said that he was the owner of 130 acres of land in Cashel, Co. Tipperary and that there was a milk quota attached to the lands which amounted to approximately 28,170 gallons. He said that as a result of borrowings which he had to make at high interest rates in the 1970s to develop his dairy business and the wiping out of his dairy herd by brucellosis between May and September 1980, he found it necessary to earn an income outside dairy farming. He and his wife, accordingly, in 1986 started up an oil distribution company and in the year 1996 he leased his lands and milk quota to one Maurice Ryan: the lease expired on the 31st March 2000. He said that, as a result of the introduction of S.I. 2000, if he wished to retain his quota, he had only three options:

(a) to resume milk production;

(b) to renew the lease to Mr. Ryan;

(c) to lease the quota temporarily for one year.

He said that neither of the first two options were available to him and the third would only enable him to retain the quota for a year. However, if he were to dispose of the milk quota, his options would be to sell it under the restructuring scheme at the maximum price fixed by the Minister of £1.36 per gallon or do the same in a year's time, after temporarily leasing it for one year. He would also be entitled to sell it to his former lessee, Mr. Ryan, but the latter was not interested in acquiring it. He said that the figure fixed by the Minister did not represent the market value of the milk quota. He said that his two children were aged 14 and 16 and that he wished to retain his milk quota so that they could take up dairy farming in a few years' time if they so chose.

The second applicant said that he was the joint owner with his wife of lands and premises at Fethard, Co. Tipperary together with the milk quota attaching to the lands: the lands comprised approximately 77 acres and the milk quota amounted to approximately 24,404 gallons. He said that some years ago he began to suffer from ill health and it became necessary for him to cease milk production and sell his cows. Since then most of his income had been earned from leasing some of the lands together with part of his milk quota and temporarily leasing the balance of the milk quota. He said that his only options as a result of the introduction of S.I. 2000 were to resume milk production or sell his quota under the restructuring scheme. He said that, as he was now nearly 76 and no longer in full health, he was not in a position to resume milk production. As to the sale of his quota under the restructuring scheme, his complaints were the same as those of the first applicant.

The third applicant is the owner of 20 acres of land at Clonoulty, Co. Tipperary together with the milk quota attaching to the lands amounting to 11,844 gallons. She said in her affidavit that for a number of years she had temporarily leased the quota to the local creamery and that most of her income had come from that temporary lease. Her only other income was the sale of weanling calves born in the winter/spring months and sold the following autumn/winter. As in the case of the other two applicants, she said that her only options as a result of S.I. 2000 were to resume milk production or sell her milk quota under the restructuring scheme and that she was not in a position to resume milk production as she could not afford the cost of installing a new milking parlour. Her complaints as to the option of selling under the restructuring scheme were to the same effect as those of the first and second named applicants.

The regulatory framework The relevant EEC Regulations are Council Regulation (EEC) No. 3950/92 of 28th December 1992 as last amended by Council Regulation (EC) No. 1256/99 of 17th May 1999...

To continue reading